HRL

HRL Ltd is an Australian public company involved in the coal, energy and power sector. (HRL is the acronym of the Herman Research Laboratory, the pre-privatisation name of the State Electricity Commission of Victoria's (SECV) R & D section). Private companies of media magnate Kerry Stokes own 20% of HRL.

History
In 1994, HRL blandly stated on its website, was "acquired the research and development businesses of the State Electricity Commission of Victoria and the Coal Corporation of Victoria ... Today, HRL's business activities include electricity generation, steam energy supply, innovative power generation technology, coal processing and waste and environmental management."

The privatisation of the Herman Research Laboratory later became the source of controversy over the deal making style of the then Victorian Premier, Jeff Kennett. After $30 million in taxpayer funds had been spent on researching different ways of burning brown coal, the laboratories were included in the power sector privatisation plans. However, the labs were not put up for a tender bid and the deal was rushed through on the last day of the 1994 financial year with Kennett signing the documentation himself. Behind the rush was the determination of the investors to capitalise on generous federal tax benefits for 'research and development' which meant any investment was "refundable, and tax deductible". While the allowance is now defunct, Four Corners reporter Sally Neighbour concluded that the "even if the project fails, the investment syndicate led by Mr Stokes' company will get back all of its money, plus a guaranteed return of between 20 and 30 per cent."

In 1997 the managing director of HRL, Graeme Pleasance, told Four Corners reporter Sally Neighbour "we had to have it done by June 1994, there was some confusion I guess in terms of what was happening with the industry, and the Premier when he heard that in fact that if those "blockers" if you like couldn't be cleared away, we might miss the deadline. I understand he freed up the system and made it happen at the time. So in effect, he facilitated the process."

Neighbour also reported that in a company newsletter Stokes wrote that his company's investment in the project followed Kennett phoning him and inviting him to invest in the state. Stokes wrote that Kennett said "Just bring your money and come. If there's any red tape, we'll cut through it". Stokes also wrote that "after what seemed like a wave from Mr Kennett's magic wand, all the complexities disappeared."

The exact details of the sale of the Herman Research Laboratory have never been made public and the Kennett government made the details of the power industry privatisation exempt from the Freedom of Information Act. However, Neighbour reported that "the taxpayer got virtually nothing from the deal. HRL was effectively given away. The State got a debenture - or corporate IOU - for $182 million. The catch is it's not payable for another 20 years, and it may never be paid at all. Amazing as it seems, that decision is up to the investors. They don't have to pay anything, unless they judge the research to be a commercial success."

Central to the plans of HRL is commercialising the technology in Victoria and then selling the rights to the technology overseas to enable other countries to use low value and often exploitable brown coal resources. As Pleasance told Four Corners, the hopes are that the development of the technology will lead to "sales all over the world, yes. Many countries would be involved in purchasing the technology. "

Stokes was so pleased with the deal that he told Jill Singer, the presenter of Channel Seven's flagship current affairs program, Today Tonight, that they should do a story on it. "The chairman was telling us how great he thought Jeff Kennett was to do business with, and it was suggested to us that we should do a story on this wonderful research and development project into brown coal that had just been purchased from the State Government," Singer told Four Corners.

A decade after the Four Corners program ran and Crikey republished the claim that the lab had been privatised without being subject to a tender bid, a Seven spokesman, Simon Francis, responded. In a letter to Crikey, Francis stated that "Kerry Stokes invested in a Bain & Co deal on HRL. He didn’t instigate the deal. The Bain syndicate beat out another two syndicates". HRL, Francis wrote, "has invested $130 million of private capital into developing a pilot plant to test new technology. This new technology has been shown to reduce emissions from wet brown coal by around 30% and there’s now a joint venture with the electricity authority in the Chinese province in Harbin to introduce this new technology. The technology works. Hence the government’s investment in the project after a private investment of $130 million over the past decade. Mr Stokes would like to counter the “particularly grubby deal” allegation in Monday’s Crikey with the point that it was a competitive tender against two significant bidders. He would also like to point out that at no time during the process did he speak to the Victorian or Federal Governments about his initial investment or the tender process. We suspect that private capital developing a new technology that reduces emissions from coal by 30% and a government commitment to further develop and take this technology to the world would be welcome. Not something – as Crikey would claim – you’d call grubby."

2002 coal allocation
HRL received a 2002 coal allocation and exploration license, proposed to use integrated drying gasification combined cycle technology in the construction of a commercial power station.

“It will reduce CO2 emissions from power stations by 30% and deliver a reduced water usage of 50% through more efficient conversion of the energy in the coal to electricity”.

In 2006, HRL received further government assistance with a grant of $50 million from the State Governments Energy Technology Innovation Strategy (ETIS). and $100 million from the Federal Government.

This time HRL proposed to build a new ‘clean coal’ 400 MW demonstration power station that will cut greenhouse emissions by 30% to be operational by 2009. It was also stated that the technology would be "suitable for carbon capture and sequestration - it is carbon capture ready, providing scope for the development of near zero emission facilities in the future".

The latest announcement was made in October 2009 - a dual gas demonstration project to begin in 2010.

The above-mentioned HRL project commitments have not materialized.

Current operations
HRL no has three operating divisions:
 * HRL Developments which has a 40% stake in the Hunter Enviro-Mining joint-venture, which is recovering black coal from mine wastes in the Hunter Valley in New South Wales and is aiming to develop a Integrated Drying Gasification Combined Cycle power station in Victoria based on brown coal;
 * HRL Technology, which provides engineering, consulting and testing services to the power, coal and manufacturing industries; and
 * HRL Operations which operates the 170 megawatt Energy Brix Australia (EBAC) brown coal-fired Energy Brix power station at Morwell in the Latrobe Valley in Victoria and manufactures and markets brown coal briquettes.

Proposed Dual Gas power station
In September 2009, HRL announced that a special purpose subsidiary, Dual Gas Pty Ltd, had been established to develop the brown coal-based Dual Gas Demonstration Project at Morwell in Victoria. The company sated that it was proposed that the company would lease land from Energy Brix Australia Corporation's power station and briquette plant and establish a power station which "will generate up to 550 megawatts of power using syngas (synthetic gas from the drying and gasification of brown coal) and natural gas (as a start up and supplementary fuel)."

HRL Managing Director Gordon Carter stated in a media release that "the demonstration project has been designed to also enable the potential retrofit of CO2 capture technology when commercially viable." The company stated that the project would receive $100 million from the Australian government's Low Emissions Technology Demonstration Fund and $50 million from the Victorian Government's Energy Technology Innovation Strategy.

In its media release the company claimed that "the CO2 emissions intensity of the demonstration project is expected to average 0.78 tonnes CO2 per megawatt hour over the life of the project. This is about 40% lower than the current Latrobe Valley brown coal fired power generation annual average CO2 emissions intensity of about 1.3 tonnes CO2 per megawatt hour."

The company stated that the project would "demonstrate the integrated drying gasification combined cycle (IDGCC) technology at commercial scale" and that the company aimed to commence construction in 2010 "pending approvals." The company stated that "an announcement of the successful engineering, procurement and construction (EPC) contractor is expected in early 2010" and that it planned on the plant being "operational and generating electricity in 2013." On September 8, 2010, China Daily reported that China National Electric Equipment Corporation had signed an Engineering Procurement Construction contract with HRL "for a 600mW power plant".

At the time of the announcement, the Energy and Resources Minister Peter Batchelor backed the project arguing that "we can’t turn coal off overnight. If we are serious about reducing emissions from energy generation, the solution needs to be a combination of developing new renewable energy sources and by making our traditional energy sources, such as coal, cleaner, through projects such as this." The project also drew support from the Nationals Member for Gippsland Darren Chester.

In August 2010 HRL announced that it had withdrawn its original application to the Environment Protection Authority for project approval in order to reconfigure the project to meet the new target emissions level of 0.8 tonnes of carbon dioxide equivalent per megawatt hour as set out in the Victorian government's Climate Change White Paper. HRL spokesperson Maria Brejcha said that increasing the amount of natural gas and reducing the brown coal derived gas percentage of the fuel was an option.

Personnel

 * Gordon Carter, Managing Director
 * Maria Brejcha, HRL Spokeswoman

Contact Details
Registered Office Level 1, Unit 9 677 Springvale Road Mulgrave Vic 3170 Australia

Phone: +61 3 9565 9888 Fax:    +61 3 9565 9777 Email:  info AT hrl.com.au Website: http://www.hrl.com.au/

Other SourceWatch Resources

 * Australia and coal
 * Clean coal
 * Dual Gas Pty Ltd
 * Geosequestration
 * Victoria and coal

External resources

 * Corporate Watch Australia, HRL Limited: Burning Coal at Three Minutes to Midnight: A report for Friends of the Earth", February 2008.

External Articles

 * Sally Neighbour, "Kennett's Culture", Four Corners, ABC TV, September 1997.
 * Stephen Mayne, "Another massive taxpayer subsidy for HRL", Crikey, March 12, 2007.
 * Simon Francis, "Seven Network spinner Simon Francis writes", Crikey, March 15, 2007.
 * Wendy Frew, "Brown coal plan a nod to dirty power: expert", Sydney Morning Herald, March 13, 2007.